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What Should An Unmanaged Earnings Distribution Look Like?


  • Olivier Vidal

    () (GREG - CRC - Groupe de recherche en économie et en gestion - Centre de recherche en comptabilité - CNAM - Conservatoire National des Arts et Métiers [CNAM])


In asserting that the number of firms reporting small profits is abnormally high, thus suggesting that earnings management has taken place, accounting researchers assume that the distribution of reported earnings should be smooth for unmanaged earnings. This has never in fact been demonstrated. This article seeks to confirm this assumption through a laboratory experiment, and also sets out to identify the general distribution pattern to be expected for unmanaged earnings. Normal distribution does not appear to be a good fit. The study's results also highlight the existence of downward management of earnings by firms with higher-than-average profits.

Suggested Citation

  • Olivier Vidal, 2010. "What Should An Unmanaged Earnings Distribution Look Like?," Post-Print hal-00594838, HAL.
  • Handle: RePEc:hal:journl:hal-00594838
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    Cited by:

    1. Thomas Dilger & Sabine Graschitz, 2015. "Influencing Factors on Earnings Management, Empirical Evidence from Listed German and Austrian Companies," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Eastern Macedonia and Thrace Institute of Technology (EMATTECH), Kavala, Greece, vol. 8(2), pages 69-86, October.

    More about this item


    accounting threshold; Earnings management; earnings distribution; experiment; accounting threshold.;

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